Wednesday, 17 December 2014

The Office for
National Statistics (ONS) has this morning released the latest set of UK labour
market data, mostly covering the three months August to October 2014.

These latest figures
at last point toward the kind of jobs recovery most likely to begin to put some
oomph into pay as well as employment. The entire 115,000 quarterly net rise in
employment (to 30.8 million, 73% of the working age population) is driven by full-time
jobs for employees which increased by 174,000, easily offsetting falls of 9,000
in the number of number part-time employees and of 29,000 in the number of
people self-employed. Unemployment fell by 63,000 (to 1.96 million) in the
quarter on the Labour Force Survey measure and by 26,900 in November when
measured by the count of claimants of Jobseeker's Allowance. Long term
unemployment (i.e. people jobless and seeking work for more than a year) dropped
by 40,000 to 684,000, though by comparison the fall in youth unemployment (16-24
year olds) of just 2,000 to 754,000 is disappointing. Nonetheless the overall good
news looks set to continue with the level of job vacancies rising by 10,000 to
690,000, just 6,000 short of the pre-recession peak. This means that there are
now 2.8 unemployed people per job vacancy, down from 4.4 this time last year
and 5.8 two years ago.

Longer hours jobs combined
with falling unemployment has boosted the annual rate of growth of average
weekly earnings (excluding bonuses) to 1.6%, higher than the comparable 1.3%
CPI inflation rate for the period covered by the latest pay data. The increase
in average weekly earnings is relatively strong in the private sector, with average weekly pay
rising by 2%, thereby boosting employees’ real pay by 0.7%, though this still
modest rate of pay growth remains unlikely to set alarm bells ringing at the
Bank of England when it comes to decisions on interest rates. However, there is
less seasonal cheer for public sector workers whose numbers fell by a further 7,000 in the latest quarter and whose average
earnings are growing at a below inflation rate of just 0.9%. For the latter,
the chill wind of austerity is biting as hard as ever.

Monday, 1 December 2014

Police constables.
Cab drivers. White van men. All have been at the centre of recent controversies
surrounding the supposed attitude of the political establishment toward us
lesser mortals. Latent condescension has burst out in the form of dismissive
language or imagery used in the heat of the moment. Maybe this is because so
many of our clucking politicos spend too much time cooped-up in Westminster
(yes Ms Mordaunt, we can all resort to fowl based metaphor). Yet when it comes
to the language of politics I’m less concerned about the occasional harsh word than
the constant use of meaningless phrases that treat us all like idiots.

Top of the list in
the next few days, with the Chancellor of the Exchequer due to deliver his
Autumn Statement on Wednesday, will be ‘long-term economic plan’. Until fairly
recently ‘Plan’ barely featured in British political rhetoric, the soviet era
overtones derided by the right and avoided by centre-left social democrats. But Conservative
politicians in particular have rehabilitated the word, applying it to almost
everything, especially economic policy. Presumably focus groups have been found
to like the idea that government has some stated purpose and direction. The
trouble, however, is that a while a meaningful plan ought to be clearly
articulated at the outset and pursued according to a timetable of deliverable
measured objectives, ‘plans’ are nowadays rarely set out in this way.

For example,
George Osborne refers to the governments/Conservative’s ‘long-run economic plan’
as though everybody knows what it is and how it is supposed to work. The
inference is that a clear course was set in 2010, that evident progress has
been made in pursing it, and that changing the plan would be harmful to the
economy. The Chancellor has been very successful in establishing this idea in
the public mind-set. Indeed, most political commentators rarely question the
premise. But there is no long-term economic plan. Mr Osborne has, and is fully
entitled to pursue, a series of policy objectives designed to advance his party’s
ideological vision but in no sense are these being benchmarked against or
delivered according to anything that deserves to be called a plan. As a result,
and the ideal convenience for a politician, whatever appears to be going well
in the economy is attributed to the plan, while whatever fails is either
ignored or attributed to some unexpected event.

Ask for a detailed
statement of the long-term economic plan from 2010 and you won’t get one –
leastways nothing that would resemble a serious organisational business plan. The
closest one gets is the fiscal deficit reduction plan. This was clearly set out
in June 2010 with an expected timetable of progress but subsequently altered so
as to extend the timetable, which now also looks unlikely to be achieved.
Insofar as this is the core of the ‘long-term economic plan’ it thus represents
a changing plan that is proving very long-term in being delivered.

The Chancellor can
of course look to the economy more generally rather than simply to the public
finances, with the return of strong economic growth in the past 18 months and
rapidly falling unemployment presented as evidence of the success of his plan. However,
while like any Chancellor in his position, Mr Osborne understandably seeks to
take a political advantage from this there is little solid evidence that the welcome
recovery and jobs outcome has anything to do with a plan implemented since
2010.

The rhetorical hype
surrounding the Chancellor’s first Budget almost five years ago implied that
getting to grip with the public finances would provide an almost immediate
stimulus to economic growth of a kind more balanced toward exports and business
investment than household consumption. If Mr Osborne’s 2010 plan envisioned two
years of flat economic growth followed by a still mainly consumer-led recovery without
improvement in net exports, he didn’t tell us at the time.

As for the jobs
boom, this has been most welcome but again not obviously attributable to any
long-term economic plan. The Chancellor has benefitted from the fruits of flexible
labour market policies implemented by successive governments, Conservative and
Labour, since the 1980s. These have turned the UK economy into a mass job
creating machine that ensures low productivity workers are priced into work
rather than remain long-term unemployed. But what Mr Osborne has failed to do
is buttress this kind of flexibility with measures to give a quick boost to productivity and real
wage growth. If the Chancellor claims his plan is responsible for the sharp fall in
unemployment, which is questionable, he should also tell us if real wage
stagnation was also part of the plan and when and why as a consequence of the
plan it will start to improve.

The ‘long-term
economic plan’ will echo beyond the Autumn Statement through to the Budget and
General Election. Doubtless it will be joined by equally simplistic political
rhetoric surrounding ‘the cost of living crisis’ and ‘getting tough on
immigration.’ I appreciate that such has been the stuff of political discourse since
people first started to climb the greasy pole and thus that things will
probably never change. But it’s nonetheless important that we take time to
shout out that the Emperor hath no clothes, lest the bad language of politics ultimately
drown out the voices of reason.